How to Avoid Probate in Utah
Key Takeaways
- Probate is not always a disaster, but avoiding unnecessary court involvement can save your family time, cost and additional work.
- A trust is not the only way to avoid probate. Beneficiary designations, joint ownership and transfer-on-death deeds can also allow certain property to pass outside of probate.
- The goal is bigger than simply avoiding probate. Your estate plan should make sure the different pieces work together and give your family clear instructions when they need them.
When people come into my office to talk about estate planning, they sometimes tell me one of their main goals is to avoid probate. I understand why. For years marketing around estate planning has focused on probate horror stories. And even putting those terrible situations aside, nobody wants to leave their family with an unnecessary court process after they die.
But I think there is a more important question underneath that one: What is life going to look like for the people you care about after you are gone?
Will your spouse know what to do? Will your children know who is supposed to be in charge? Have you made your wishes clear enough that your family will not have to guess what you intended? If you have children from a prior marriage, have you put enough structure in place that your spouse and your children are not left trying to negotiate their competing interests after your death?
That is really what good estate planning is about. Avoiding probate can be part of it, but probate avoidance is not the only goal. Ultimately, you want to make the financial and legal transition after your death as clear and manageable as possible for the people you leave behind.
What Is Probate, and Why Do People Want to Avoid It?
Probate is the legal process your family has to use after your death to obtain authority over property that is still in your personal name. If you die owning real estate or other assets in your name that cannot otherwise be transferred, your family will need to use the court process to have someone legally authorized to deal with that property. Because that appointment involves the court system, it will take more time and potentially additional cost.
That does not mean probate is necessarily something to fear. Many Utah probates are fairly routine. The process serves a very important function in our legal system. But even a routine probate means somebody has to take responsibility for it. Someone has to gather information, meet with the attorney, prepare and file documents, deal with creditors, manage the property and eventually distribute the estate. Someone has to deal with potential disputes between beneficiaries or heirs who may not agree with the way things are being done.
That may all be manageable. But it is still another job we have left for someone we care about, usually at a time when that person is already dealing with our death and everything else that comes with it. If you have not left instructions for that person, then the job can be even more demanding and difficult. When we can reasonably eliminate unnecessary work and uncertainty for the family, I generally think that is worth doing.
Fortunately, there are several ways property can pass without probate. The important thing is not simply choosing one of them. It is making sure the different pieces work together and actually make things easier for your family.
Use a Revocable Living Trust
For many families, a revocable living trust is one of the most effective ways to avoid probate. You transfer appropriate property into the trust during your lifetime, but you continue to control and use it. When you die, the successor trustee you selected can step in and manage the trust property without first having to go to court simply to obtain authority.
That is one reason I like trusts in the right circumstances. It is not just that they can avoid probate. A good trust gives the person stepping into your shoes a set of instructions. It identifies who is supposed to be in charge, who is supposed to benefit and what should happen to the property you leave behind.
A trust can also address much more than probate. For example, it can provide for a surviving spouse while still protecting an inheritance for children from a prior marriage. It can give a trustee direction about when and for what purposes children should receive money rather than leaving the trustee to make those decisions alone. It can also provide a structure for managing property if you become unable to manage it yourself.
Those issues are often much more important to a family than simply keeping a case out of probate court. If you are deciding whether a will or a trust makes sense for you, our Will vs. Trust guide discusses those differences in more detail.
Use Beneficiary Designations Carefully
Some property has its own instructions for what happens when you die. Retirement accounts and life insurance policies are common examples. These types of accounts can usually be set up to pass the benefit directly to one or more beneficiaries.
Those designations can be a simple and effective way to avoid probate, but they need to fit the rest of your plan. The beneficiary designation generally controls that particular asset regardless of what your will says. That can create problems when an old designation no longer matches what you intended. Maybe you named beneficiaries twenty years ago and your family has changed since then. Maybe your trust provides a carefully designed plan for your children, but a major account names those children individually and bypasses the trust altogether.
The question is not simply, “Will this account avoid probate?” The better question is, “When this account passes, will it end up in the right hands, in the right way, and will that fit with everything else I have told my family I want to happen?”
Not Sure How to Avoid Probate?
The right approach depends on your family, what you own and how your estate plan fits together.
Be Careful With Joint Ownership
Joint ownership can also avoid probate. Real estate owned with rights of survivorship may pass directly to the surviving owner when one owner dies. That can be very useful, particularly with some property owned by spouses. But adding someone to an account or deed simply to avoid probate can create an entirely different set of problems.
Suppose a parent adds one child to a bank account because that child helps pay bills. When the parent dies, does the account belong entirely to that child? Was the child supposed to divide it with the other children? Did Mom understand the legal effect of adding the child to the account, or was she simply trying to make it easier for someone to help her? Under Utah law, the money remaining in a joint account will generally belong to the surviving account owner after the other owner dies, regardless of what the deceased owner’s will says.
Those are exactly the kinds of situations that can turn into family disputes. Everybody may genuinely believe they know what Mom intended, but they remember the conversation differently. Avoiding probate has not accomplished very much if the shortcut we used creates a fight among the children. The way property is titled should be intentional, not just convenient.
Consider a Transfer-on-Death Deed
Utah also allows a transfer-on-death deed for real estate. It can allow you to retain ownership and control of the property during your lifetime while identifying who will receive it after your death. For the right person and the right property, that may be a very useful tool. But, again, the fact that something avoids probate does not automatically make it the best estate plan.
A transfer-on-death deed answers a narrow question: who receives this piece of real estate when I die? It does not necessarily answer the larger questions about who should manage the rest of your affairs, how other beneficiaries should be treated, or what should happen if family circumstances change.
Sometimes a simple solution is exactly what a family needs. Sometimes the family needs more structure.
Avoiding Probate Is Really About the People You Leave Behind
I think it makes sense to avoid unnecessary probate when we reasonably can. But I do not think “avoid probate” should be the entire goal of an estate plan. The real goal is to leave the people you care about with as much clarity as we can reasonably give them.
We cannot guarantee that family members will never disagree. We cannot plan around every event that might happen twenty years from now. But we can eliminate a great deal of unnecessary uncertainty.
And uncertainty is often where the trouble starts. One child remembers Dad saying one thing. Another remembers something completely different. And both children could be totally correct. A surviving spouse believes a particular asset was meant to provide for her, while the children believe it was supposed to come to them. The person in charge is trying to make decisions while everyone else is watching and wondering whether those decisions are fair.
A thoughtful estate plan does as much of that decision-making as possible while you are still here to make the decisions yourself.
The Documents Are Tools
A trust, a will, a beneficiary designation or a transfer-on-death deed is not an estate plan by itself. Those are tools we use to build the plan.
The actual estate plan is the structure we put around the people you care about. It should tell them who is in charge, give that person the authority needed to act, explain where things should go and remove as many opportunities for confusion and conflict as reasonably possible.
For some families, a revocable living trust is the best way to accomplish that. For others, a will-based plan combined with beneficiary designations and carefully titled property may be entirely appropriate.
That is why I do not think estate planning should begin with the question, “Do I need a trust?” It should begin with your family. Who are you trying to protect? What are you worried about? What would make the transition easier for the people you leave behind? Once we understand those things, we can choose the legal tools that help accomplish them.
If you would like to talk through what that might look like for your family, schedule a consultation with Sage Estate & Business Law.
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